The Bangko Sentral ng Pilipinas (BSP) has cancelled the registration of money service business (MSB) operator Nikko Mart (NIKKO) due to violations of existing rules and regulations.
In a BSP Circular Letter (CL-2024-021), signed by BSP Deputy Governor Chuchi G. Fonacier last April 15, the central bank’s policy-making body the Monetary Board cancelled the registration of NIKKO to operate as a remittance and transfer company (RTC) with money changing (MC)/foreign exchange dealing (FXD).
Based on the circular letter, the Monetary Board in a July 13, 2023 resolution (Resolution No. 918.A), approved the cancellation of NIKKO registration with the BSP to operate as an RTC with MC/FXD, and this is “pursuant to Section 901-N of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), in view of the serious violations of Republic Act No. 9160 (The Anti-Money Laundering Act of 2001), as amended, and its Revised Implementing Rules and Regulations, Section 601-N of the MORNBFI, in relation to Part 9 of the MORNBFI Q-Regulations, Section 901-N of the MORNBFI, and the notarized Deed of Undertaking.”
“Further, the Monetary Board, in its Resolution No. 52 dated 11 January 2024, denied with finality the motion for reconsideration of NIKKO on the cancellation of its registration,” said the BSP.
NIKKO is the 15th erring MSB whose registration with the BSP has been cancelled.
MSBs are non-bank entities engaged in remittance, money changing and FX dealing. Pawnshops, along with foreign exchange dealers/money changers and/or remittance agents, are also referred to as MSBs by the BSP.
The BSP monitors other forms of MSBs such as electronic money or e-money businesses and also regulate all RTCs including remittance platform providers and e-money issuers. Money transfers and foreign exchange dealership also includes virtual assets.
Based on an October 2023 BSP report, pawnshops and MSBs are still the main financial service access points for borrowers in need of immediate liquidity. They offer not only remittance and money-changing services, but also cash-in and cash-out agents in the countryside.
Last month, the BSP released a draft circular where it is proposing new guidelines on the MSB reporting governance framework such as changes to risk monitoring, disclosure of crimes and losses, as well as adjustments to penalties for non-compliance.
The draft circular covers financial records, reports and audited financial statements of MSBs. It also fulfill the BSP’s obligation to strengthen the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) measures.
The BSP said the amendments should “enhance regulatory and supervisory activities over MSBs to ensure that attendant risks remain manageable as the industry continually evolves and business models become increasingly complex amidst emergence of new players in remittance and breakthrough financial technology.”
One of the changes is the adjustment in monetary sanctions if an MSB fail to comply with the rules on the submission of delayed, erroneous, and unsubmitted reports. The previous penalty as stated in the BSP MORNBFI is P60 for each occurrence in the case of erroneous reports, or for each day for delayed or unsubmitted reports which will accumulate until complied with.
Based on the proposed circular, the applicable penalty will be based on a prescribed fine for each occurrence or for each day until compliant.
The prescribed standards are proposed as: P150 to P450 for MC/FXD secondary report; and P450 to P1,350 primary report for RTC.
For the reporting of crimes and losses, MSBs will still report to the BSP crimes whose amount is P20,000 and more from robbery, theft, swindling or estafa, forgery and other deceits. If it involves personnel regardless if it led to the destruction or loss of MSB property, this will be reported to the BSP even if the amount involved is under P20,000.
In the latest version of the circular, incidents involving material loss, destruction or damage to the MSB’s property or facilities, other than arising from a crime, will be reported to the BSP when the amount involved per incident is P100,000 or more. This was higher than the previous threshold of P20,000.
As of end-December 2023, there are 7,357 MSBs registered with the BSP.